Medicare typically pays for:

• 100 % of in-hospital costs at public hospitals
• 75 – 85% of General Practitioner and specialist services

Additionally, the public system covers:

• most immunizations
• 100% of prescription medicine costs
• 30 to 40% of the premiums for private health insurance cover

Treatment under the public health care system does not extend to Australian citizens traveling outside the country, so travel insurance is highly recommended to cover those costs.

Quality of public care

While, certainly, publicly-funded medical care is better than no care at all, the Medicare system does have its drawbacks. There may be long waiting times for non-emergency medical procedures and public hospitals offer more limited choices of doctors than if you were to select from a wide range of private care facilities. This is always a consideration with insurance policies, though. Finding a good doctor is hard enough – is your doctor in your network?

Fortunately, Australians have the option – and, indeed are encouraged – to buy private medical insurance.

Private medical cover, benefits

The benefits of private medical cover include:

• The ability to choose from various private hospitals and a wide range of doctors
• Shorter wait times for care in private facilities
• Affordable premiums not based on age (in general), medical history or health
• Cover for services not paid for by Medicare, including ambulances, dental care and optometry

This article provides more in-depth information on the different levels of cover private health insurance offers.

“Strongly encouraged”

While the public health care system is paid for by a 1.5% tax levy, the Australian government keeps Medicare costs down by making it in citizens’ best interests to pay for a private health care plan.

Medical Levy Surcharge: Anyone with taxable income greater than $70,000 in 2009 ($140,000 for couples) must take out private health care insurance or pay an additional 1 % surcharge in their taxes. This encourages anyone who can afford private health cover to purchase it. Typically only people who truly can’t afford private health care rely on the Medicare system as their primary means of health insurance.

Lifetime Health Cover: It was noted earlier that premiums do not go up based on medical history, general health or age, however, one exception applies. Anyone who has not taken out private hospital cover by July after their 30^th birthday will pay a 2% loading on their premium for every year over 30. For instance, someone taking out hospital insurance for the first time at age 32 will pay a 4% loading on their premium. The loading continues for 10 years. This encourages people to take out insurance when they are young and less likely to need it, rather than putting an excessive burden on private health insurance companies by taking on “high-risk,” older customers, more likely to make claims before they’ve paid into the policy for long.

Waiting Periods: Waiting periods for treatment of specific conditions (pre-existing ailments, or PEAs) encourage people to purchase insurance policies before they need them. Insurance companies may impose waiting periods of up to 12 months on:

• Pre-existing conditions with symptoms present up to six months prior to the purchase of insurance;
• Any obstetric conditions, including pregnancy

Two month waiting periods exist for all other benefits, again, preventing a person from getting insurance, using it for check-ups or treatments, and then cancelling the policy.

Does it work?

It’s often been said that there is no perfect health care system, but our blend of public and private health care seems to work well for most people.

If a person has not taken out private hospital cover by the 1st July after their 30th birthday, then when (and if) they do so after this time, their premiums must include a loading of 2% per annum. Thus, a person taking out private cover for the first time at age 40 will pay a 20 per cent loading. The loading continues for 10 years. The loading applies only to premiums for hospital cover, not to ancillary (extras) cover.

Most aspects of private health insurance in Australia are regulated by the Private Health Insurance Act 2007.

Photo by nellee100

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What does Medicare Cover?

Each year when paying taxes, part of the proceeds go towards funding universal health insurance.   According to PrivateHealth.gov.au, Medicare covers hospital expenses, medical expenses, and pharmaceutical expenses. Through Medicare,  a public hospital will treat you at no charge with a hospital-appointed doctor.  You can also visit a general practitioner and receive reimbursement.  Finally, you only will have to pay a portion of the costs for most prescription medications you might be required to take.

If Medicare Covers Me, What Does Private Insurance Cover?

Even though Medicare covers everyone, many still choose to purchase private health insurance.  This is because while Medicare covers most of the expenses for healthcare, Medicare does not cover everything you may require to remain healthy through your lifetime.  In addition, if your income is over a certain threshold, unless you carry private medical insurance, you will be subjected to the Medicare tax levy.

Items not covered by Medicare include:

• Ambulance costs
• Private patient hospital costs
• Medical costs incurred while traveling
• Medical costs related to surgeries or services that are not deemed necessary
• Examinations for the purposes of obtaining life insurance
• Vision care needs
• Dental Care needs
• Hearing aids
• Long-term care through home nursing
• Physiotherapy, speech therapy, psychology, etc.

You can purchase private insurance to cover many of the above expenses.

What Types of Private Insurance Exist?

Basically, there are two types of private medical coverage:  hospital and general treatment.  Hospital coverage is just like it sounds, it covers you at various levels in case of a visit to the hospital.  General treatment coverage provides coverage for services including dental, vision, occupational therapy and more.

Hospital Cover – There are four categories of private hospital coverage:

• Top private hospital cover – this has no exclusions restrictions on what will be paid by the company
• Medium private hospital cover – no exclusions, but there are restrictions on some items for coverage
• Budget private hospital cover – this excludes at least one coverage item
• Public hospital cover – it covers benefits only if you are treated in a public hospital.

General Cover – There are three categories of general coverage

• Comprehensive cover – this coverage includes at the very least dental, orthodontics, vision, physiotherapy, occupational therapy, hearing aids, pharmaceuticals, chiropractic and podiatry
• Medium Cover – this level of coverage leaves out orthodontics and health management and more, but it does include dental, optical, and physiotherapy and more
• Budget cover – it includes at least one area such as dental, optical, physiotherapy and chiropractic services (for more information, you may wish to view the glossary page at PrivateHealth.gov.au).

Finding the Policy that Works for You

Finally, once you know what additional medical coverage you would like (if any), then you can research the different companies that offer that level of coverage.  In order to decide whether you would like a private health insurance policy, you may find the publication, “Insure? Not sure?”, is an invaluable resource.  The PrivateHealth.gov.au website features a tool that can help you find approved companies for your medical insurance needs.  The website sorts the companies by monthly premium price, and features links to each provider’s website.

Photo by celestehodges

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Before leaving on holiday near or far, millions of world travelers first check to confirm that they have adequate insurance coverage. Because of the potentially disastrous financial and personal implications that could result from a injury, illness, or even death while traveling, in Australia, the prevailing school of thought is that “if you can’t afford travel insurance, you can’t afford to travel.”

What is Travel Insurance?

Although no sound or reputable travel insurance policy will cover any willfully dangerous activity like parachuting above a mountain range, should you require hospitalization, travel insurance will allow such arrangements to be made without financially crippling your finances or those of your loved ones.

While (thankfully!) death or serious injury remain unlikely events for the overwhelming majority of travelers, a more practical aspect of traveler’s insurance is its’ coverage of incidents that may transpire before or during travel: theft, trip cancellation, baggage damage, etc.

These sorts of incidents, while minor relative to death, can still prove an enormous inconvenience and a pesky financial burden. For this reason, whether you travel frequently or once a decade, travel insurance is generally a vital component of sensible travel.

Although there is no shortage of reasons why travel insurance is important, when choosing both a provider and a policy for your coverage:

• Be sure to thoroughly read your policy to understand everything that your coverage includes or excludes. The expenses associated with travel insurance commonly depend upon the type of coverage you require, your age and physical well being, and, naturally, where you are traveling and for how long.

• Because your medical insurance may be valid in other countries, always ask for clarification on policy issues or questions directly with the insurer.

• Obtain sufficient medical coverage to offset any expenses or liabilities that could be incurred in the foreign country you are visiting.

• Always discuss and note with your insurance provider the pre-existing medical conditions you have (if any).

• Know the potential dollar limit or cap on insurable items you may consider bringing and stowing in your luggage.

• Don’t confuse legitimate travel insurance with the considerably more dubious policies of “flight insurance” sold in the vending machines of many international airports.

• Research and understand cancellation waivers. While the waivers provide some protection against financial loss in the event of a trip cancellation, many policies come with fine print and severe restrictions.

As with any form of insurance (life, health, etc.) being informed is ultimately the best course of action to protect yourself and your loved ones should an unfortunate threat to life and limb manifest itself.

Before obtaining a policy, familiarize yourself with the options appropriate and financially suited for your individual needs. As with other types of insurance coverage, it is essential to comparison shop in order to not only find the best deal and rates, but also to ensure that your business is given to a reputable firm that will come through for you if and when you ultimately need them.

Photo by bfraz

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The first, and cheapest, way to purchase a car is by paying cash. However, most people simply cannot afford to spend that much cash at once. Another popular option is to lease a car; the purchaser makes payments for a certain period of time and essentially “rents” the car for that time period. However, those who want to own the car for its lifetime, but cannot afford to pay cash, often choose to obtain car finance.

Common Contract Terms

When discussing car finance, it is important to understand they key factors which will determine how much you pay for the car and how good of a deal you get. A car finance contract will have very similar terms to other financing and loan contracts: for example,

1. Length of Contract- The overall cost of the car finance contract will depend largely on the length of the payment period. By shortening the payment period, you may be able to save thousands of dollars in interest over the length of the contract period.
2. Interest Rate- One other important factor when determining the overall cost of a car loan is the interest rate. You can save money by finding a lender that offers the loan at a lower rate; even a few fractions of a percentage point will make a difference.
3. Down Payment- A significant down payment can help reduce the overall cost of borrowing. By paying as much money as you can up front, you won’t have to borrow as much, and you will save on the interest charges.
4. Fees and Penalties- Many finance contracts will include different fees and penalties in the “fine print.” Be wary of anything hidden that could substantially increase the cost of the loan, such as hidden processing fees and penalties for prepayment of the loan. 

Tips For Saving Money

While the specifics of the terms of the car loan will depend on how much the financing costs, there are many ways to increase the chances of getting a better deal.  Some of these tips include:

• Initially pay down as much as you can in cash
• Look for alternatives to taking out a loan
• Shop around for the best rates and plans
• Maintain a clean credit record

The Sydney Morning Herald has a great list of personal /car loan tips and questions to consider when taking out a loan. And yes, it’s perfectly relevant for non-Sydney siders too!

Totaling The Costs

The financing of a car is one of the most important aspects of car shopping. Again, one can choose to pay for the car in cash, lease it, or finance the car with a loan. The best way to save money on a car finance loan is to shop around and compare the contract terms from different lenders. However, you can also save money by doing simple things such as paying down a lot of cash and avoiding hidden penalty fees.

For more resources on car financing and car insurance, check out Fido.

Photo by gem66

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Medicare

Medicare is the primary source of health cover in Australia. Funded and managed by the government through Medicare Australia, it covers citizens and most permanent residents (except the poor residents of Norfolk Island).

Medicare covers 100% of the costs incurred if you enter a public hospital as a public patient. However, you generally cannot choose your doctor (one is assigned to you by the hospital for each stay) or your admission time. If you see a doctor outside of the hospital setting, Medicare will pay for 100% of the consultation for a general practitioner and 85% of the fee for a specialist. If you choose to be admitted to a hospital as a private patient, Medicare will pay for 75% of the fee, according to their set fee schedule. Medicare also pays for a percentage of any medications you may be prescribed as well under something called the PBS – Pharmaceutical Benefits Scheme.

Medicare is funded by a 1.5% Medicare levy on salaries as well as a 1.0% penalty levy on higher income earners who have not taken out private insurance. The bulk of the money comes from the government’s general fund, as the levies aren’t nearly enough to fund the cost of the Medicare system.

As with any insurance cover Medicare has a list of exclusions, such as optical or vision care. Visit the Medicare site to find out more about the program.

Private Hospital Cover

Like the name implies, this cover kicks in when you choose to be admitted as a private patient in either a public or private hospital. The big benefit to this is that you get to choose your doctor and hospital, and wait times are generally much shorter in private settings.

Private hospital cover kicks in after Medicare pays its part, which is usually 75% of the bill. Some policies will provide ambulance cover as well, since Medicare does not cover any costs related to transport by ambulance. Residents of Tasmania and Queensland have ambulance transport provided by the state government, so if you live there skipping this cover is probably a good idea.

There are plenty of different private plans to choose from, and the cost will vary according to a number of factors, including the following.

• Excess – Plans that require you to pay part of the bill before the plan does will lower your premium. The higher the excess, the lower the premium will be. Be aware that a hospital stay that is less than the amount of excess required by your plan will have to be paid directly by you.
• Co-payment – Some plans will require you to make a co-payment at the time you receive services eligible to be covered by the plan. This could be on a per day basis for hospital stays or on a per case basis. Co-payments will sometimes have a yearly cap on them and once you accumulate that much in payments, you won’t need to make co-payments for the rest of the year.
• Exclusions – Many plans will exclude or restrict certain types of illnesses and treatments. By accepting a plan with exclusions, you should expect to play less in monthly premiums.
• Hospital Substitutes – Some plans will cover alternative methods of treating and managing ailments that would normally occur in a hospital but happen in smaller, specialized treatment centres instead.

In an effort to relieve some of the burden from the Medicare plan, the government currently pays a 30% rebate for the cost of private health cover premiums as well as a charge a penalty to high income families and individuals who do not opt to take out private health cover.

While the array of funds and premiums can be confusing, the Private Health Insurance Ombudsman and the government’s Private Health initiative site are great places to do your research as these sites, especially the latter, contain encyclopedic listings and details from every health fund and policy on offer.

Private General Treatment Cover

This other type of private cover is available to help pay for treatment not covered by Medicare, such as optical and dental treatment as well as speech and physiotherapy treatments. Many people opt to purchase this type of private cover and rely on Medicare and public hospitals for any major illness or injury.

Many plans package general treatment cover, also known as ancillary cover, with hospital cover to create a comprehensive private health plan to supplement your Medicare cover.

Lifetime Health Cover

Technically not a type of health cover, the lifetime cover program has been enacted by the government to encourage citizens to take out private cover when they are young and to maintain throughout their life. The program does this by raising premiums for first time insurance buyers proportionate to their age.

You have until the July 1^st after your 31^st birthday to take out private hospital cover without having to pay any sort of premium loading. For every year you wait after that there will be a 2% loading added to the premium, up to a maximum of 70%.

There are some caveats and conditions to determine your loading if you are beyond the age of 31 and don’t have private hospital cover yet. The government created a calculator that will consider any exemptions you might have and determine your loading percentage if you were to take out insurance between now and your next birthday.

In Conclusion

The long waiting periods and lack of choice in the Medicare program, as well as the lack of cover for certain things, make having private health cover a prudent decision for anyone that can afford it. Having private cover provides you with more choices. If you choose to use Medicare and go to a public hospital, then it is a choice you made that best fits your situation. But if you feel as though you need to use your private cover and choose your doctor and hospital, then you will have that option as well.

The best physician-patient relationships are based on trust and built up over the course of time. Your health shouldn’t have to wait for an opening at a crowded public hospital. You should be able to determine, with your physician, the best time for you to have any procedure performed. Think about it, do you really want to have a health issue that requires hospitalization and never have even met the doctor who will be treating you?

Photo by mr nightshade

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If you have family members that, in the event of your sudden death, would be left with any financial burdens, it is imperative for your peace of mind and theirs to have a life insurance policy ensuring that their basic expenses are met.  And even though it is difficult to obtain a high-benefit policy at a low cost, there is no shortage of avenues to pursue when it comes to reducing your life insurance premium.

1. Youth is on Your Side

Age is an important aspect that life insurance companies consider when they determine the premium for a life insurance policy. Although there are scores of young people who put off life insurance until they “can afford it” or they are older and “need it,” such logic is in error. The younger you are, the cheaper your life insurance premiums will be. As a result, if you are young and considering life insurance, now is the time to lock in a great low rate and continue the policy.

2. Competition is Key

Getting the policy that’s right for you should be a highly competitive process.  When you’re in the market for life insurance, avoid the temptation to sign up for the first policy that fits your budget. Contact as many reputable life insurance providers as possible and have them negotiate for your business. Even though such an enterprise will likely be time consuming, the amount of information you will learn could prove just as valuable as the amount of money you will likely save. Being as practical and savvy as your circumstances allow will potentially do more than anything else to secure a low premium for an appropriate policy.

3. Drop The Pounds First, Your Premium Second

There’s no escaping the scale. Many life insurance companies request applicants for life insurance to have a complete physical examination before actually obtaining a policy.

Insurance companies consider overweight applicants to be high-risk candidates for coverage. Because overweight individuals experience higher rates of heart disease, for example, gaining optimal fitness (losing weight, reducing blood pressure, etc.) will help to lower your premium along with your chances of an early death.

4. Reduce Occupational Hazards

Despite being a difficult hurdle to jump for many, changing jobs (from a high-risk occupation to a considerably safer one) can impact your life insurance premium. And, unfortunately for some, one’s occupation or profession is a substantial factor taken into consideration when determining your policy rate.

5. Take a Hard Look at Your Hobbies

Insurance companies consider more factors that you may realize when shaping your policy. If you’re an amateur skydiving instructor, for example, you’re likely to be penalized more severely than if you maintain an ant farm. Although having life insurance shouldn’t have to impair living your life to its fullest, reducing risks wherever possible is a much-appreciated gesture in the eyes of insurance providers.

6. Quit Smoking

It may be a no-brainer, but smoking is a factor that many disregard when applying for life insurance. Despite the misperception that smokers only pay a slightly higher premium than non-smokers, in reality, smoking can double or triple the price of your premium. Kicking the habit (along with any other unsavory vices) will make both your wallet and your lungs breathe easier.

7. Know Your History

Any information indicating a healthy past (for yourself and your immediately family) is vital. And taking the time to study your family’s medical history can help reduce your premium dramatically. If you can show a minimal rate of heart disease, cancer, stroke, diabetes or other chronic diseases, your insurance rate could come to modestly reflect that positive history.

8. Don’t Be Penalized for Paying

Paying for life insurance means making payments on a monthly, quarterly, semi-annual or annual basis. Although paying quarterly or monthly might be an easier fit for your budget, some companies hike your charges for paying premiums frequently. If a company penalizes you for paying more frequently, either take your business elsewhere, or manage your budget to fit a payment schedule that doesn’t cost you more in the long run.

9. Get a Renewal Guarantee

A renewal guarantee provides a policyholder with the right to start a new term after the current one expires. And although you will pay a higher premium based on your accelerating age, you won’t be required to undergo a new health exam, which, conceivably, could reveal new heath problems that would either disqualify further coverage or demand an exorbitant new premium.

10. Give Your Business to a Solid, Stable Company

The number of companies that offer life insurance is staggering enough to make one’s head spin. Instead of simply responding to a flyer in your mailbox or answering an ad in a magazine, explore policy options at companies that have high ratings from at least two or three independent rating agencies, of which there are many throughout various parts of the world. Because your policy is only as sound as the financial stability of the company providing it, be mindful to select an insurance provider with a reputable name and long track record of financial strength.

Photo by CONTIVISION

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One solution currently offered by creditors is called Consumer Credit Insurance (CCI). This insurance policy covers your loan payments in the event that you are not able to make them due to personal hardship. Consumer Credit Insurance is the broad term that refers to this type of insurance; a more narrow definition would include mortgage protection insurance, loan (including auto loan) insurance, and credit card insurance.

Features Of A Consumer Credit Insurance Policy

As with any type of insurance, there are a variety of features that need to be considered before buying the policy. An uninformed insurance purchase can create many headaches down the road, especially when the policies have broad exclusions to receiving benefits. Some things you need to consider about a Consumer Credit Insurance policy include:

Hardships Covered- Most CCI policies cover three types of hardships:

• Death
• Involuntary Unemployment
• Illness or Accident

While these three hardships are the standard for the industry, realize that not every policy will include each one. If you want to save some money on the policy and have enough savings to live on if you become unemployed, you may choose a lesser plan that only covers in the event of death (to protect your family even after you are gone). Be sure you understand what hardships are covered before you purchase the policy.

Exclusions- Be sure to ask the insurer about the exclusions to the policy. For example, if you work in a dangerous occupation, the insurance company may exclude your work-related injury claim. Also, the policy may exclude certain illnesses, especially if they claim you had a “pre-existing condition”. Be well informed of the exclusions before purchasing any policy.

Amount of Coverage- This feature is especially important if the insurancepolicy is your mortgage insurance. All CCI policies will limit the amount that they will pay out in benefits. This is normally defined as both a maximum period of time (for example, 24 months), and a maximum amount of overall coverage (for example, $200,000). Since the policies are typically sold along with the loan, you will normally take out a policy that is just large enough to cover the loan, whether it is a $20,000 car loan or $200,000 mortgage payment.

Cost Compared To Other Policies- While CCI may sound like a good idea so far, it is important to understand that there may be better deals out there. The Australian Securities & Investments Commission has reported that the cost of life coverage under a CCI policy is two to four times more expensive than term life insurance.

What Fits Your Needs?

In the end, the best decision is the one that fits your personal financial needs the best. If you already have sufficient coverage, you may not need such a policy; however, if you do not have much insurance to cover you, this may be a good choice. Since one small clause or exclusion can prevent you from collecting the benefits you have paid for, be sure to discuss the topics above with your insurer before buying the policy.

Photo by sean dreilinger

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